Monday, 25 of March of 2019

Economics. Explained.  

Consumer Confidence

February 26, 2019

The Conference Board reported that consumer confidence jumped 9.7 points in February to 131.4 after having declined 4.9 points in January.  This series reached a high of 137.9 in October but stock market volatility and the government shutdown dented consumers confidence for several months but it now appears to be back on track.

Lynn Franco, Director of Economic Indicators at the Conference Board said, “Consumer Confidence rebounded in February, following three months of consecutive declines.  The Present Situation Index improved, as consumers continue to view both business and labor market conditions favorably. Expectations, which had been negatively impacted in recent months by financial market volatility and the government shutdown, recovered in February. Looking ahead, consumers expect the economy to continue expanding.”

Confidence data reported by the Conference Board are roughly matched by the University of Michigan’s series on consumer sentiment.   As shown in the chart below, trends in the two series are identical but there can be month-to-month deviations, and both remain at very lofty levels.

The consumer should continue to provide support for overall GDP growth in 2018.  The stock market struggled for several months late last year but has recovered almost all of its previous loss.  Because the economic fundamentals remain solid we expect the stock market to reach a new high, probably by midyear.  The economy continues to crank out 190 thousand jobs per month.  Consumer debt in relation to income remains low.  Interest rates remain low even though the Fed is gradually raising short-term interest rates.

We anticipate GDP growth of 2.7% in 2019 after having risen 3.1% last year.

Stephen Slifer

NumberNomics

Charleston, SC


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